- Govinda P.

Purohit
Berger paints had its colourful beginning in 1760, and today in 2020 Berger paints India ltd.
is the second largest paint company in India.

They are offering their customers a variety of innovative painting solutions decorative or
industrial.

It has presence in Indian as well as foreign countries like Australia, USA, Singapore. In
these three countries they are having their manufacturing units.

Berger paints offers a wide range of products which includes:

• Berger Royale Luxury Interior Satin Emulsion.

• Berger WeatherProof Ultra Semi-Gloss.
• Berger 404 Semi-Gloss Enamel.
• Berger ALD Concrete Primer.
• Berger Alkali Sealer.
• Berger 303 Flat Emulsion.
• Berger 404 Flat Enamel.
• Berger Clear Acrylic Over Glaze

Being the second largest paint company in India, it has the major market share after Asian
paints.

It shows a consistent track record of being one of the fastest growing paint companies,
quarter on quarter, for the past few years.

Committed to being a responsible corporate citizen, Berger proactively pursues strategies

both within the organisation and outside that bring multiple societal and environmental
benefits to all stakeholders.

When they started they had a net annual sales turnover of 25lakhs and today when the
Berger paints is second largest paint company, they are having the net sales turnover
of 6000crores.
Company overview:

Variables Values

Market cap (CR) 48,497.86

P/E 72.88

Book value 25.27

Dividend (%) 190

EPS(TTM) 6.09

Dividend yield (%) 0.38

Face value (%) 1.00

- Berger paints, share performance graph from 2001 to till date.

- The company reported a huge growth in these 20 years of time period.

Technical view:

Indicators What they indicates for 1 month

NEUTRAL (Reading in between
RSI
45-55)
BOLLINGER WIDTH Bullish
Bullish (MACD is above ‘0’ & crosses
MACD
above signal line.)
Bullish (The ADX line shows an
AVERAGE DIRECTIONAL INDEX
uptrend)
% PRICE OSCILLATOR NEUTRAL
One year daily chart:

CURRENT PRICE 494.30

52 WEEKS HIGH 597.00
52 weeks low 300.10

Buy BERGER PAINTS with a stop loss below Rs.470 for target of Rs 530
Peer comparison:

KANSAI
Company name BERGER PAINTS ASIAN PAINTS
NEROLAC

500.50 1622.50 387.25

Current mkt. price

73.23 57.28 40.67

P/E

1695.87 5420.28 1080.07

Sales (Qtr)

182.35 764.43 67.22

Net profit (Qtr)

48,658.47 155522.77 20920.77

Market Cap (Cr)
0.38 0.65 0.81
Dividend yield

30.68 17.00 13.47

5 YR. RETURN
(%)

- As discussed, BERGER PAINTS is the second largest paint company in India with
market capitalisation of 48,658.47 crores.

- Comparing P/E, Berger paints has a very high P/E ratio, that means people pays more for
this company.

- Net profit is greater than KANSAI NEROLAC but very low as compared to Asian paints.

- If comparing to last 5 year returns, Berger paints beat to its competitors with 30.68% of 5
year returns, it simply means the stock performed well in last 5 years.
 Shareholding pattern:

Shareholders 2018 2019 2020

Promoters 74.99 74.98 74.99

FIIs 5.25 5.44 7.76

DIIs 9.11 8.37 6.85

Public 10.65 11.21 10.40

2018 2019 2020

80

74.99 74.98 74.99

60

40

20

10.77 11.21 10.4

7.76 8.52 8.37
5.73 6.85
5.44
0
Promoters FIIs DIIs Public
Shareholding pattern:

- No change in promoters shareholding’s for FY- 2018,2019,2020.

- FIIs increased their holdings in March-2020 by 2.32%, which is the positive sign from the
companies and investors point of view, because FIIs drives the Indian stock market and if
they are investing in some stock then it will be positive sign for any company.

- DIIs as well as public decreased their holdings in this stock.

Balance sheet:

Particulars Mar-2019 Mar-2018 Mar-2017

TOTAL SHARE
97 97 97
CAPITAL

TOTAL
RESERVES AND 2375 2097 1804
SURPLUS

BORROWINGS 520 422 406

TOTAL CURRENT
1533 1402 1179
LIABILITIES

TOTAL
4362 3943 3440
LIABILITIES

FIXED ASSETS 1272 1099 1019

CURRENT
2583 2359 2057
ASSETS

TOTAL ASSETS 4362 3943 3440

- There is no change in share capital.

- Continuous improvement in reserves and surplus, that means a company’s profit

increasing year on year.

- Increase in fixed assets.

- Current assets are also increased year on year.

- There is a growth of 419 crores in the total assets of Berger paints.

Cash flow statement:

Mar-2019 Mar-2018 Mar-2017

561.67 421.9 394.5

-408.5 -183.43 -308.4

-179.14 -200.13 -82.42

-25.52 38.34 3.68

- Cash from operations is increasing year on year for Berger paints.

- There is decrease in cash from investing and financing activities, which is obviously not a
good thing for any company or investors point of view, but still considering the past 5-7
years performance the company will soon show a recovery mode.

- Because these two things decreased, there is also decrease in net cash flow.

- As it is the second largest and favourite choice of customers, the company will perform
better in nearer future.
Profit and loss statement:

P&L statement of
Mar-2020 Mar-2019 Mar-2018
BERGER PAINTS.

NET SALES 5691.59 5515.55 4723.79

TOTAL INCOME 5,859.32 5,707.20 4,859.14

TOTAL
4,750.70 4,871.03 4,068.05
EXPENSES

OPERATING
957.80 810.19 743.40
PROFIT

EPS 7.20 4.52 4.45

EQUITY
220.00 190.00 180.00
DIVIDEND

- Net sales increased over last 3 years (I.e. of FY- 2018-19-20).

- Total income is increased in last three years , for Berger paints India ltd.

- For FY-2019 the expenses are increased but then for FY-2020 the expenses are decreased
again.

- There is continuously increasing in their operating profit.

- Earnings per share shows very nice growth in FY-2020.

- The dividend on equity is also increasing year on year, that means we can trust on this
company. (The company only pays good dividend if it is in profit)
Ratio analysis:

KEY FINANCIAL
Mar-2020 Mar-2019 Mar-2018
RATIOS
OPERATING
PROFIT MARGIN 16.66 14.54 17.67
(%)
NET PROFIT
10.33 8.21 8.72
MARGIN (%)

QUICK RATIO 0.71 0.85 0.93

DEBT EQUITY
0.20 0.20 0.19
RATIO
INTEREST
COVERAGE 4.98 4.91 5.24
RATIO
ASSETS
TURNOVER 2.07 2.17 2.15
RATIO
DIVIDEND
N.A 42.32 44.38
PAYOUT RATIO

- There is an increase in operating profit margin.

- Net profit of the company also increased by 2.12%, which is a good thing for the
company as well as the investors.

- Quick ratio decreases year on year.

- There is a slight decrease by 0.26% in interest coverage ratio.

- Dividend payout ratio is also decreased for FY-2019.

Self sustainable growth rate:

Particulars Mar-2029 Mar-2018 Mar-2017

SSGR (%) 16 17 16

“SSGR is being constant for past 3 years for Berger paints”.

Past sales growth:

No. Of years 3yrs 5yrs 7yrs 10yrs

Past sales
15% 10% 11% 14%
growth (%)

- Sales growth for past 10 years is 14%.

CAPEX:

Mar-17 Mar-18 Mar-19

Cash from
394.4 421.9 561.67
operating activities
Capex(NFA+WIP
315.46 290.37 292.24
CHANGE +DEP)

- The company have greater cash from operating activities than its capital
expenditure (CAPEX), it means the company is in good profit since last three
years.
RECOMMENDATIONS:

MAINTAIN BUY: (FOR ONE MONTH)

We can buy the share for next one month, as all the key market
indicators shows the bullish pattern for Berger paints.

For long term:

BUY

- All the key financials of the company that are,

- Net profit
- Sales
- Constant SSGR,
- Healthy dividend payout

- All these shows a positive impact towards the investors.

- The management of Berger paints is encouraged by rising the demand even in this
pandemic, that it is shaping up very well.

- Also the company having limited CAPEX over their income, which is good thing .

- So we should maintain buy for Long term perspective.(3-5 yrs).